TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF ZYDUS PHARMA JAPAN CO. LTD.

Transcription

1 INDEPENDENT AUDITORS REPORT TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF ZYDUS PHARMA JAPAN CO. LTD. We have audited the accompanying financial statements of ZYDUS PHARMA JAPAN CO. LTD., ( the Company ) which comprise the Balance Sheet as at 31 st December, 2014 and the Statement of Profit and Loss for the year ended on that date and a summary of the significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position and financial performance of the Company in accordance with the accounting principles and the Accounting Standards generally accepted internationally, i.e. in accordance with International Financial Reporting Standards ( IFRS ). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our broad review. We conducted the review of these financial statements in accordance with the International standards on Auditing issued by the International Auditing and Assurance Standards Board. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We have conducted generally accepted audit procedures in accordance with International Auditing Standards in review and carrying out audit of these financial statements. We believe that our review of financials provide a reasonable basis for our opinion. We also believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

2 Opinion In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Companies Act, 2013 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted internationally, i.e. in accordance with IFRS: (a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 st December, 2014; and (b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date. Emphasis of Matter Without qualifying our report, the attention of the members is invited to Note No. II-(7) and II-(8) under Significant Accounting Policies regarding the financial statements of the company having been prepared on a liquidation basis in view of the closure of the business operations by the company in Japan and consequential scaling down its manufacturing, selling and other operations in the year 2013, initiation of the process of disposing off its fixed assets, other assets and liabilities, preparation and circulation of employee retrenchment plan, its accumulated losses and negative networth as at 31 st December, Accordingly, all the remaining fixed assets (other than land and building) and other assets have been written down to their estimated net realizable values. Provision has also been made for all the accrued liabilities and future costs estimated to be incurred in the process of closure of the business operations. Report on Other Legal and Regulatory Requirements Further to our comments in the annexure referred to above, we report that: (i) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. (ii) The accounts and financial statements of the Company are duly prepared and certified by the management of the company in accordance with the generally accepted IFRSs. These accounts have been forwarded to us for our review and have been appropriately dealt with by us in preparing and submitting our report thereon. (iii) The Balance Sheet and the Statement of Profit and Loss dealt with by this Report are in agreement with the books of account.

3 (iv) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements including Balance Sheet and statement of Profit and Loss dealt with by this report comply with the generally accepted IFRSs. (v) With respect to the other matters to be included in the Auditor s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: a. The Company does not have any pending litigations which would impact its financial position. b. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses. c. Since the Company is incorporated outside India, this clause regarding reporting on amounts which were required to be transferred to the Investor Education and Protection Fund by the Company is not applicable. For Mukesh M. Shah & Co. Chartered Accountants Firm Registration No W Place : Ahmedabad Date: 14 th May, 2015 Partner [Chandresh S. Shah] Membership No.:

4 Particulars Zydus Pharma Japan Co. Ltd Balance Sheet as at December 31, 2014 Note No. Japanese Yen Thousands INR Thousands As at December 31 EQUITY AND LIABILITIES: Shareholders' Funds: Share Capital 1 3,810,500 3,410,500 2,007,752 1,988,662 Reserves and Surplus 2 (3,949,109) (3,864,912) (2,080,784) (2,253,628) (138,609) (454,412) (73,032) (264,966) Non-Current Liabilities: Other Long Term Liabilities , ,747 Long Term Provisions , , , ,233 Current Liabilities: Short Term Borrowings 5 0 1,000, ,100 Trade Payables , ,815 Other Current Liabilities 7 230, , , ,362 Short Term Provisions 8 29, ,114 15, , ,864 1,603, , ,107 Total 121,255 1,209,694 63, ,374 ASSETS: Non-Current Assets: Fixed Assets: 9 Tangible Assets 28,007 85,365 14,757 49,777 Intangible Assets , ,533 28, ,487 14, ,310 Current Assets: Inventories , ,523 Trade Receivables 11 1, , ,792 Cash and Bank Balances 12 89, ,248 47, ,925 Short Term Loans and Advances 13 1,470 23, ,927 Other Current Assets , ,897 93, ,207 49, ,064 Total 121,255 1,209,694 63, ,374 Significant Accounting Policies II 1 to 27 Statement of Profit and Loss for the year ended December 31, 2014 Particulars Note Japanese Yen Thousands INR Thousands No. Year ended December 31 REVENUE: Revenue from Operations: Sale of Products , , , ,472 Other Income Total Revenue 229, , , ,713 EXPENSES: Cost of Materials Consumed 18 4,025 96,497 2,336 55,375 Purchases of Stock-in-Trade , ,953 Changes in Inventories Finished goods and Work-in-progress ,862 86, ,143 48,459 Employee Benefits Expense , ,498 65, ,291 Finance Costs 22 17,323 33,607 10,048 19,597 Depreciation Amortisation and impairment expenses 9 11,783 98,965 6,834 57,705 Other Expenses , ,653 79, ,847 Total Expenses 477,202 1,428, , ,227 Loss before Exceptional Items and tax (247,980) (524,983) (143,830) (325,514) Less: Exceptional Items 24 (163,782) 379,567 (94,993) 221,326 Loss before Tax (84,197) (904,550) (48,837) (546,840) Japanese Yen INR Basic & Diluted Earning per Equity Share [EPS] 25 (1,091.44) (13,139.25) (633.07) (7,943.25) Significant Accounting Policies II 1 to 27 As per our report of even date For Mukesh M. Shah & Co., Chartered Accountants Firm Registration Number: W For and on behalf of the Board Chandresh S. Shah Partner Membership Number: Ahmedabad, Dated: May 14, 2015 Director

5 I-Company overview: Zydus Pharma Japan Co. Ltd Significant Accounting Policies Zydus Pharma Japan Co. Ltd [the Company] was incorporated on August 25, The Company's registered office is situated at Hirakawacho Fushimi Building 2F,1-4-3 Hirakawacho Chiyoda-ku, Tokyo JAPAN. The Company was engaged in manufacture and sales of prescription based pharmaceutical products. II-Significant Accounting Policies: 1 Basis of Accounting: The financial statements have not been prepared with an assumption of going concern but have been prepared on liquidation basis. 2 Reporting Currency Translations: The Local accounts are maintained in local and functional currency which is "JPY". These accounts have been translated in Indian Rupees [INR] considering the operation of the Company as "Non-integral operations" for holding company. The translation of Financial Statements to INR from "JPY" is performed for assets and liabilities using the exchange rate prevailing on the Balance sheet date and for revenue and expenses using the average exchange rate for the respective period. The gain or loss resulting from such translation is included in "Foreign Currency Translation Reserve" under Reserves and Surplus. 3 Use of Estimates: The preparation of the financial statements in conformity with Japanese generally accepted principles requires management to make estimate and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the year. 4 Fixed Assets and Depreciation: All the remaining fixed assets have been written down to their estimated net realizable values. 5 Inventories: Inventories are stated at the lower of cost or net realisable value. Cost is determined principally by the average method. Net realisable value is the estimated selling price as per the prevailing market condition. 6 Revenue Recognition: A Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable for goods and services provided in the normal course of business, net of trade discounts and volume rebates and VAT. B Revenue in respect of sales is recognised when goods are dispatched to the customers. C Interest income is recognised on time proportionate method. D Revenue in respect of other income is recognised when no significant uncertainty as to its determination or realisation exists. 7 Closure of operation: A The Company has been incurring operating losses since the Company purchased Nippon Universal Pharmaceuticals Ltd. and started manufacturing and selling of the ethical pharmaceutical products in Japan. B During the previous year, Cadila Healthcare Limited, the ultimate parent company, has carried out a portfolio and strategy review of its business in Japan operated through the Company and has decided to discontinue its existing business in Japan. Consequently, the management of the Company stopped manufacturing and selling of the ethical pharmaceutical products from end of March C Pursuant to this, the Company has started scaling down its manufacturing, selling and other operations in The Company has also initiated the process of disposing off its fixed assets, other assets and liabilities. An employee retrenchment plan has been prepared by the Company, pursuant to which the Company had carried out the process of relieving its employees including medical representatives in phased manner during the year 2014 by providing them separation package as agreed by the Company with them. D In view of the above, the financial statements of the Company for the year ended December 31, 2014 and December 31, 2013 have not been prepared with an assumption of going concern but have been prepared on liquidation basis. All the remaining fixed assets (other than land and building) and other assets have been written down to their estimated net realizable values. Provision has been made for all the accrued liabilities and future costs estimated to be incurred in the process of discontinuing the business operations. Difference between the carrying values and realizable values of fixed and other assets and provision for liabilities arising on account of discontinuance of operations have been charged to Income Statement and their net amount has been separately disclosed under the head Exceptional Items [Refer Note 23]. E In consultation of the relevant Japanese regulatory authorities, the Company had applied for drug price deletion of all products, which was published in the Official Gazette in November Pursuant to this, the Company had carried out cancellation of marketing approvals and manufacturing & sales permits. The said cancellation has been accepted by the Pharmaceuticals and Medical Devices Agency. 8 Significant events after balance sheet date: A Pursuant to the employee retrenchment plan, the Company relieved its employees including medical representatives in phased manner from 31st January, 2014 by providing them separation package as agreed by the Company with them. Up to 30th September 2014, 35 out of total 38 employees have been relieved in three different phases. The remaining 3 employees of Regulatory Department have been relieved on 31st March, B During the year 2014, the company sold manufacturing and marketing rights of 14 products to another Japanese company (the Buyer). The rights were actually transferred to the Buyer in March/April -2015, as agreed with them.

6 Zydus Pharma Japan Co. Ltd Japanese Yen Thousands INR Thousands As at December 31 Note: 1-Share Capital: Authorised: 400,000 [as at December 31, 2013: 400,000] Ordinary Shares of 20,000,000 20,000,000 10,538,000 11,662,000 JPY 50,000/- each [Stated value] 20,000,000 20,000,000 10,538,000 11,662,000 Issued, Subscribed and Paid-up: 91,395 [as at December 31, 2013: 83,395] Ordinary Shares 4,125,500 3,725,500 2,173,726 2,172,339 Less : 2,700 [as at December 31, 2013: 2,700] Treasury Stock (315,000) (315,000) (165,974) (183,677) Total 3,810,500 3,410,500 2,007,752 1,988,662 A Number of shares at the beginning of the year 80,695 73,295 Add: Shares issued during the year 8,000 7,400 Number of shares at the end of the year 88,695 80,695 Shares held by itself as Treasury Stock 2,700 2,700 B The Company has only ordinary shares. All ordinary shares rank parri passu and carry equal rights with respect to voting and dividend. In the event of liquidation of the Company, the ordinary shareholders shall be entitled to proportionate share of their holding in the assets remained after distribution of all preferential amounts. C Ordinary shares (other than treasury stock) of JPY 26,976/- each, fully paid held by Holding Company, Zydus International Private Limited, a company incorporated in the Republic of Ireland which is a subsidiary company of Cadila Healthcare Limited, the ultimate holding company, a company incorporated in India. Number of Shares 19,295 19,295 % to total share holding 22% 24% Ordinary shares (other than treasury stock) of JPY 50,000/- each, fully paid held by Holding Company, Zydus International Private Limited, a company incorporated in the Republic of Ireland which is a subsidiary company of Cadila Healthcare Limited, the ultimate holding company, a company incorporated in India. Number of Shares 69,400 61,400 % to total share holding 78% 76% D Treasury Stock are held by Zydus Pharma Japan Co. Limited itself Number of Shares 2,700 2,700 % to total share holding 100% 100% Note: 2-Reserves and Surplus: Capital Reserve: Balance as per last Balance Sheet 20,000 20,000 10,538 11,662 Other Reserves: General Reserve: [*] Balance as per last Balance Sheet 364, , , ,540 Foreign Currency Translation Reserve: [**] Balance as per last Balance Sheet Add/ [Less]: Exchange differences on translation to Indian Rupee , ,290 0 Surplus in statement of Profit and Loss: Balance as per last Balance Sheet (4,249,412) (3,344,862) (2,477,830) (1,930,990) Add: Loss for the year (84,197) (904,550) (48,837) (546,840) Balance as at the end of year (4,333,609) (4,249,412) (2,526,667) (2,477,830) Total (3,949,109) (3,864,912) (2,080,784) (2,253,628) [*] General reserve can be used as per Japanese regulations. [**] Hitherto, the gain/ loss arising on the translation of the Financial Statements to INR was given effect into Statement of Profit and Loss. However, from the year under report, it is now included in "Foreign Currency Translation Reserve" [FCTR] under Reserves and Surplus. Consequent to this change, loss for the year (on INR conversion only) is higher by INR 244,155 thousands, with a corresponding effect in "Reserves and Surplus". Note: 3-Other Long Term Liabilities: Trade Deposits 0 15, ,747 Total 0 15, ,747 Note: 4-Long Term Provisions: Provision for Employee Benefits 0 45, ,486 Total 0 45, ,486 Note: 5-Short Term Borrowings: Secured Working Capital Loans repayable on demand 0 1,000, ,100 Total 0 1,000, ,100

7 Zydus Pharma Japan Co. Ltd Japanese Yen Thousands INR Thousands As at December 31 Note: 6-Trade Payables: Trade Payables 0 35, ,815 Total 0 35, ,815 Note: 7-Other Current Liabilities: Advances from Customers 172, ,250 91, ,352 Interest accrued but not due on borrowings Others: Provision for Expenses 21,110 64,614 11,123 37,676 Payable to Statutory Authorities 36,694 15,156 19,334 8,837 Total 230, , , ,362 Note: 8-Short Term Provisions:: Provision for Employee Benefits 29, ,697 15, ,863 Others: Provision for claims for product expiry and return of goods 0 111, ,967 Total 29, ,114 15, ,830 Note: 9-Fixed Assets: A Tangible Assets: Freehold Plant and Furniture and Land Buildings Equipment Fixtures Total Japanese Yen Thousands Gross Block: As at December 31, , , ,415 52, ,131 Additions 0 20,300 51,374 71,674 Disposals 0 0 (1,980) (1,980) Other adjustments ,209 2,209 As at December 31, , , ,809 54, ,034 Additions 0 Disposals (189,809) (54,200) (244,009) Other adjustments 0 As at December 31, , , ,025 Depreciation and Impairment: As at December 31, ,205 81,146 49, ,876 Depreciation for the year 0 5,500 64,804 1,489 71,793 Disposals As at December 31, , ,950 51, ,669 Charge for the year 0 1,011 5, ,055 Disposals 0 9,302 (151,589) (51,419) (193,706) As at December 31, , ,018 Net Block: As at December 31, ,471 32,811 43,859 3,224 85,365 As at December 31, ,471 22, ,007 Tangible Assets: INR Thousands Gross Block: As at December 31, ,158 77,483 81,062 30, ,739 Additions 0 11,837 29, ,793 Disposals Other adjustments (340) 1,590 2,060 As at December 31, ,190 90, ,678 31, ,592 Additions Disposals Other adjustments (307) (8,684) (110,678) (31,606) (151,275) As at December 31, ,883 81, ,317 Depreciation and Impairment: As at December 31, ,085 46,846 28, ,522 Depreciation for the year 0 3,207 37, ,862 Disposals Other adjustments ,431 As at December 31, ,966 85,103 29, ,815 Depreciation for the year , ,092 Disposals 0 4,901 (79,872) (27,093) (102,064) Other adjustments 0 (6,893) (8,502) (2,888) (18,283) As at December 31, , ,560 Net Block: As at December 31, ,190 19,132 25,575 1,880 49,777 As at December 31, ,883 11, ,757

8 Zydus Pharma Japan Co. Ltd Note: 9-Fixed Assets-Continue: B Intangible Assets: Brands/ Computer Marketing Total Trademarks Software Autho. Rights Japanese Yen Thousands Gross Block: As at December 31, ,892 6,511 21, ,556 Additions Disposals Other adjustments As at December 31, ,892 6,646 21, ,691 Additions Disposals (238,892) (6,551) 0 (245,443) Other adjustments 0 0 (21,153) (21,153) As at December 31, Amortisation and Impairment: As at December 31, ,594 3,783 20,020 77,397 Amortisation for the year 23,909 2, ,172 Disposals As at December 31, ,503 6,646 20, ,569 Amortisation for the year 4, ,728 Disposals (81,588) (7,289) (20,420) (109,297) As at December 31, Net Block: As at December 31, , ,122 As at December 31, Intangible Assets: INR Thousands Gross Block: As at December 31, ,912 3,759 12, ,883 Additions Disposals Other adjustments 1, ,545 As at December 31, ,298 3,875 12, ,507 Additions Disposals (125,872) (3,452) 0 (129,324) Other adjustments (13,426) (373) (12,334) (26,133) As at December 31, Amortisation and Impairment: As at December 31, ,940 2,184 11,558 44,682 Amortisation for the year 13,941 1, ,843 Disposals Other adjustments As at December 31, ,192 3,875 11,907 60,974 Amortisation for the year 2, ,742 Disposals (42,989) (3,841) (10,759) (57,589) Other adjustments (4,572) (407) (1,148) (6,127) As at December 31, Net Block: As at December 31, , ,533 As at December 31,

9 Zydus Pharma Japan Co. Ltd Japanese Yen Thousands INR Thousands As at December 31 Note: 10-Inventories: [The Inventory is valued at lower of cost and net realisable value] Finished Goods Trading 0 247, ,534 Raw Materials 0 91, ,396 Work-in-progress 0 30, ,712 Others: Packing Materials 0 23, ,881 Total 0 393, ,523 Note: 11-Trade Receivables: [Unsecured] Considered doubtful 0 3, ,953 Less : Provision for doubtful debts 0 3, , Others - Considered good Outstanding for a period exceeding six months 0 1, Others 1, , ,120 1, , ,792 Due from Holding/ Subsidiaries/ Fellow Subsidiaries Total 1, , ,792 Note: 12-Cash and Bank Balances: Balances with Banks 89, ,185 47, ,888 Cash on Hand Total 89, ,248 47, ,925 Note: 13-Short Term Loans and Advances: Others: Advances recoverable in cash or in kind or for value to be received Considered good 1,470 22, ,206 Considered doubtful 0 1, ,470 23, ,927 Total 1,470 23, ,927 Note: 14-Other Current Assets: Prepaid Expenses 364 3, ,897 Total 364 3, ,897 Japanese Yen Thousands INR Thousands Year ended December 31 Note: 15-Revenue from Operations: Sale of Pharmaceutical Products 229, , , ,472 Total 229, , , ,472 Note: 16-Other Income: Other Non-operating Income Total Note: 17-Cost of Materials Consumed: Raw Materials: Stock at commencement 91, ,697 53,396 88,729 Add : Purchases 0 4, ,378 Less : Inventory destroyed Less : Cost adjusted against sale of API [Refer Note No. 23] 90,215 52, , ,107 Less : Stock at close 0 91, , , ,711 Packing Materials consumed 3,618 30,294 2,098 17,664 Total 4,025 96,497 2,336 55,375 Note: 18-Purchase of Stock-in-Trade: Purchase of Stock-in-Trade 0 298, ,953 Total 0 298, ,953 Note: 19-Changes in Inventories: Stock at commencement: Work-in-progress 30,375 25,428 17,712 14,680 Stock-in-Trade 247, , , , , , , ,705 Less : Destruction of Inventory 86, ,103 0 Less : Stock at close: Work-in-progress 0 30, ,712 Stock-in-Trade 0 247, , , ,246 Total 191,862 86, ,143 48,459

10 Zydus Pharma Japan Co. Ltd Japanese Yen Thousands INR Thousands Year ended December 31 Note: 20-Employee Benefit Expense: Salaries and wages 104, ,521 60, ,149 Contribution to provident and other funds 8,213 40,264 4,764 23,478 Staff welfare expenses 1,375 9, ,664 Total 114, ,498 65, ,291 Note: 21-Finance Cost: Interest on working capital loan 8,827 21,426 5,120 12,494 Bank commission & charges 8,496 12,181 4,928 7,103 Total 17,323 33,607 10,048 19,597 Note: 22-Other Expenses: Research Materials 0 3, ,052 Analytical Expenses 0 4, ,366 Consumption of Stores and spare parts 1 2, ,355 Power & fuel 2,379 5,088 1,380 2,967 Rent 17,426 34,479 10,107 20,105 Repairs to Plant and Machinery Insurance 4,756 6,006 2,758 3,502 Rates and Taxes [excluding taxes on income] 12,020 10,000 6,972 5,831 Managing Directors' Remuneration 3,515 25,442 2,039 14,835 Traveling Expenses 7,888 37,556 4,575 21,899 Legal and Professional Fees 33,577 11,568 19,475 6,745 Exchange rate difference due to translation [Refer Note - 2 [**] ,407 Net Loss on foreign currency transactions and translation (648) 17,872 (376) 10,421 Advertisement Expenses 2, ,294 Commission on sales 11,990 77,247 6,954 45,043 Freight and forwarding on sales 8,648 39,558 5,016 23,066 Representative Allowance and Incentives 4,143 21,243 2,403 12,387 Other marketing expenses 15, ,279 8,792 63,721 Bad Debts: Provision for Doubtful Debts (3,340) 2,329 (1,937) 1,358 (3,340) 2,329 (1,937) 1,358 Miscellaneous Expenses [*] 19,938 48,747 11,099 28,424 Total 137, ,653 79, ,847 Above expenses includes Research related expenses as follows: Research Materials 0 3, ,052 Analytical expenses 0 4, ,366 Traveling Expenses Miscellaneous Expenses 0 13, ,943 Total 0 21, ,474 [*] Miscellaneous Expenses include Payment to the auditors as Auditor 4,618 5,325 2,678 3,105 Note: 23-Exceptional Items: Provision made for bringing value of fixed assets to their realizable value 23, ,567 0 Sale of API [Net of COGS of JPY 90,215 thousands] (31,347) 0 (18,181) 0 Provision for amount payable to employees pursuant to separation package 0 232, ,349 Provision for other liabilities 40,666 36,027 23,587 21,008 Provision for diminution in value of Inventory (3,896) 111,420 (2,260) 64,969 Gain on Sales of Asset [Brand] (192,597) 0 (111,706) 0 Total (163,782) 379,567 (94,993) 221,326 Note: 24-Calculation of Earnings per Share [EPS]: The numerators and denominators used to calculate the basic and diluted EPS are as follows: A Loss attributable to Shareholders (84,197) (904,550) (48,837) (546,840) B Basic and weighted average number of Ordinary shares outstanding during the year Number 77,143 68,843 77,143 68,843 C Equivalent nominal value of ordinary share Japanese Yen 50,000 50,000 50,000 50,000 Japanese Yen INR D Basic & Diluted EPS (1,091.44) (13,139.25) (633.07) (7,943.25)

11 Zydus Pharma Japan Co. Ltd Note: 25-Related Party Transactions: A Name of the Related Parties and Nature of the Related Party Relationship: a Holding Company: Zydus International Private Limited b Ultimate Holding Company: Cadila Healthcare Limited, a company incorporated in India c Fellow Subsidiaries: Dialforhealth India Limited Zydus Pharmaceuticals (USA) Inc. [USA] Dialforhealth Unity Limited Nesher Pharmaceuticals (USA) LLC [USA] Dialforhealth Greencross Limited Zydus Healthcare (USA) LLC [USA] German Remedies Limited Zydus Noveltech Inc. [USA] Liva Pharmaceuticals Limited Hercon Pharmaceuticals LLC [USA] Zydus Wellness Limited Script Management Services (Pty) Ltd [South Africa] M/s. Zydus Wellness-Sikkim, a Partnership Firm Zydus Nikkho Farmaceutica Ltda. [Brazil] Zydus Technologies Limited Laboratorios Combix S.L. [Spain] Biochem Pharmaceutical Industries Limited Zydus Pharmaceuticals Mexico SA De CV [Mexico] Zydus BSV Pharma Private Limited Zydus Pharmaceuticals Mexico Services Company SA M/s. Zydus Healthcare, a Partnership Firm De C.V.[Mexico] Zydus Lanka (Private) Limited [Sri Lanka] ZAHL B.V. [the Netherlands] Etna Biotech S.R.L. [Italy] ZAHL Europe B.V. [the Netherlands] Zydus Netherlands B.V. [the Netherlands] Bremer Pharma GmbH [Germany] Zydus France, SAS [France] Zydus Worldwide DMCC [Dubai] Zydus Healthcare Philippines Inc [Philippines] Zydus Discovery DMCC [Dubai] d Directors: Mr. Ganesh Nayak Mr. Jignesh Bhatt Mr. Shridharan Jayakrishnan [Retired w.e.f. 11-Sep-14 and reappointed w.e.f. 14-Apr-15] Mr. Masaki Ihara [Appointed w.e.f. 11-Sep-14 and retired w.e.f. 14-Apr-15] B Transactions with Related Parties: The following transactions were carried out with the related parties in the ordinary course of business : a Details relating to parties referred to in items 25 - A [a & b] Value of the Transactions [Yen Thousands] Holding company Ultimate Holding company Nature of Transactions Year ended December 31, Sales : Goods: Cadila Healthcare Limited 0 0 7,664 Reimbursement of expenses Cadila Healthcare Limited 0 0 2,944 Purchases: Goods: Cadila Healthcare Limited ,708 Services: Cadila Healthcare Limited ,407 Share Capital: Shares Issued: Zydus International Private Limited 400, ,000 0 Outstanding: Payables: Cadila Healthcare Limited ,166 Value of the Transactions [INR Thousands] Holding company Ultimate Holding company Nature of Transactions Year ended December 31, Sales : Goods: Cadila Healthcare Limited 0 4,469 Reimbursement of expenses Cadila Healthcare Limited 0 1,717 Purchases: Goods: Cadila Healthcare Limited 0 86,712 Services: Cadila Healthcare Limited 0 6,068 Share Capital: Shares Issued: Zydus International Private Limited 210, ,747 Outstanding: Payables: Cadila Healthcare Limited 0 18,756 b There are no transactions with the parties referred to in items 25 - A [ c & d ] Note: 26-Segment Information: There is only one primary segment namely "Pharmaceuticals".

12 Note: 27 Zydus Pharma Japan Co. Ltd Previous year's figures have been regrouped/ reclassified wherever necessary to correspond with the current reporting year's classifications/ disclosure. Signatures to Significant Accounting Policies and Notes 1 to 27 to the Financial Statements As per our report of even date For and on behalf of the Board For Mukesh M. Shah & Co., Chartered Accountants Firm Registration Number: W Chandresh S. Shah Partner Membership Number: Ahmedabad, Dated: May 14, 2015 Director